Last year Penney revamped its marketing and sales model under new CEO Ron Johnson. The former Apple (AAPL) executive tried to eliminate coupons and sales and offer everyday low pricing instead. Johnson also tried turning the 1,100 department stores into a collection of smaller shops featuring brands like Levi's and Izod from PVH Corp. (PVH).

But loyal JCP customers who had grown accustomed to the couponing and sales didn't warm to the new pricing plan.

In December, Penney's relented and offered "gift" coupons to customers and discounted some items.

The disappointing sales could hurt Penney's ability to launch new in-store shops, the one element of Johnson's plan that customers responded positively towards.

"We believe JCP may have to slow the roll-out of new high productivity shops," Binetti wrote in a client note.

Penney has plans to open shops for home goods designer Jonathan Adler and apparel retailer Joe Fresh this spring.

The company is slated to report Q4 results in February.

The Retail-Department Store group is struggling as a whole, ranked No. 154 out of the 197 industry groups IBD follows.

Kohl's (KSS) and Macy's (M), which lowered their quarterly sales estimates last week, were each down about 1% intraday Friday.